Things You Need to Check Before You Seal the Deal

Searching for a dream home is like looking for a needle in a haystack! We comprehend that the process of buying a new property is both overwhelming and demanding.

Driving your way from one part of the city to another and running down through each street is a hell lot of work. And, when you are narrowing down to a few of the umpteen choices out there, you ought to pay attention to certain key points. Here is a list of the additional digging which you must do to ensure that the property you are going to buy has everything you wanted.

Now, let’s not beat around the bush and get straight to the point.

Check out all the ‘pre-owners’!

If you want to know the ‘condition behind the paints’ (i.e. the actual state) of the house, you can get a hint about it by going through the list of the previous homeowners. More people would mean more attrition! Thus, the number of times the house has been flipped or foreclosed would help you interpret that how the place has been treated previously and how much value does it hold currently.

In addition, the time for which the current owner has stayed in the house conveys a lot! It might help you understand the key reason as to why the seller is selling it.

Take the advice of an insurer!

Get in touch with an insurance provider and calculate the insurance cost of the plat with his help. The cost of insurance is dependent upon various factors, including the location of the property. For instance, if it is situated in a flood-prone area, the cost will obviously be high.

Things like these make up for essential questions that a buyer must know. So, be ready to get exposed to surprising and hidden facts about your would-be property.

Work it out with the seller!

Read the fine print of the deal document carefully. Figure out what your seller actually means with each clause. All this will help in preventing confusions, regrets and unnecessary arguments later on.

Basically, the picture should be clear!

Comfortable is preferable!

When you are moving to a new site, it is important to make sure that you live happily and comfortably there. Talking with your neighbors and assessing their behavior is the first step. Next, you may like to know that how far are the ‘significant places’ such as hospital, fire-station, place of worship, supermarket, etc., from the property under discussion.

After all, being isolated is not always favorable!

Don’t forget security!

You may forget anything else, but not this! Undoubtedly security is critical for your well-being. To start with, inquire about the crime rate of the locality from the local police department and search some online sources. Next most important facet is to check whether there are any security systems installed at the location or not. Security cameras can help a great deal in deterring crime and burglary.

Verify the facts related to security in person!

Be clear about your future goals!

Property is something that you are investing all your hard-earned money into. While buying a new one, just think about your future motives. For instance, you might want to put a room on Airbnb at some point or build a shed in the backyard. Thus, a lucid ‘what you aspire’ list should be made and a thorough research should be conducted to ensure that your motives can turn into reality.

Thinking about future plans is imperative to settle on the right choice.

Whatever is your purpose of investing in a new property, it is important to be 101% sure before you sign the papers. The money that is once gone does not come back. So, just put in all your efforts!

Hope the above tips help you cross-check on your selected location and you get the place of your dreams!

Good luck for your investments!

Continue Reading

Consider Investment Properties for Sale

When you are looking at investment properties for sale you want to make sure that you are getting the best investment property for your money. When looking at investment properties for sale you are looking for property that you can rent or resell. If you want to be successful in your venture there are some things that you need to consider before buying the property.

When you look at investment property you want to not only look the property over but also where it is located and what they are asking for the property. Just because the sign or realtor says it is investment properties for sale do not always mean it is a good investment. You need analyze closely the potential property.

After looking at what they are selling the property for you then need to consider the potential value. If you do not see a gap between their selling price and the actual value and it is not in your favor you should consider looking at other properties. If you really want the property they you need to develop a strategy for getting a good return on the property. This strategy could involve renting out the property, whether it is an apartment, home, or piece of property. You could also hold onto the property to allow it to gain gradually more appreciation value.

Some buy properties for sale to renovate and then rent or sell it. Before going this route make sure that you consider all that will have to be done to get it to rentable or salable condition. If you underestimate the repair costs you could lose a lot of money. Some opt to purchase substandard property that does need repairs but not as much as renovation properties.

If you are going to hire a contractor to get the work done on substandard or renovation property make sure that you get accurate quotes of all the work that needs to be done before placing a bid on the investment property for sale. You should get at least two quotes for repair work. Make sure that the contractor can work on the property full time and can get the house to a standard that will allow it to pass inspection. This is important if you are going to use it as rental property.

You also need to consider where the investment properties for sale are located. If you are looking at commercial investment properties for sale you need to envision what type of business could be built on that property and see if there is a need for the business or businesses that could be placed there. You also need to see if those particular businesses would be attracted to build in the area.

Continue Reading

Why You Must Consider Owning Rental Properties

I was a 24-year old MBA grad know-it-all. I had life perfectly figured out and I certainly knew everything about investments. Working in the finance industry for a large multi-national firm, I often worked with high networth business owners. Much to my surprise, these multi-millionaires almost always invested in real estate and were generally seeking out new ways to capitalize on real estate opportunities. I was perplexed, didn’t these highly successful business men and women know that the paltry returns of real estate were minuscule compared to the stock market? I mean, I could show them many “Wall-Street” reports that concluded real estate was a really poor investment compared to stocks and mutual funds.

It was almost a full decade later that I would begin to seek to understand real estate investing in earnest. Thankfully, by this point life had taught me the importance of humility and, that much to my surprise, maybe I didn’t know everything. I began to quickly see that with real estate, the “cards are stacked in your favor.” You enjoy the tremendous benefits and advantages that the wealthy have throughout time. The economic structural systems and tax laws are designed for your benefit! I was excited and started learning as quickly as I could.

Rental properties have historically been the #1 wealth building strategy in real estate. You borrow money to buy your asset and then have someone else pay for the costs of your asset as you enjoy the benefits of appreciation, equity build-up, tax advantages, and cash flow. What a system!

Here are the 14 reasons you must consider owning rental properties.

1) Leverage (OPM)

The most powerful tool in real estate! You can typically borrow between 70% – 80% of the cost of the property and yet still receive 100% of the benefit of appreciation. OPM stands for Other People’s Money and is what helps fund your deals.

2) Someone Else Pays the Expenses

A good rental property is one where the rents paid by the tenant more than cover all of the expenses associated with the property and yet you still receive all of the benefits, including appreciation.

3) Appreciation

Typically home prices increase in value over time. According to the Texas A&M Real Estate Center, the median list price for a home in the Austin/Round Rock, TX MSA in 1990 was $72,252. In 2015 it was $260,000!

4) Loan Paydown / Equity Buildup

Even if you do not have much equity when you initially purchase the property, without contributing any additional capital you can build up significant equity. You get the duel benefit of using the rents collected to paydown on your mortgage while simultaneously enjoying appreciation. The house is now worth more in value than when you bought it and your loan balance is now lower than the original amount you borrowed. Over time, these two factors are significant!

5) Tax Benefits / Deductions

Most expenses associated with the cost of ownership can be directly deducted from any income you receive on the property. The tax benefits of owning real estate are extensive and are definitely worth exploring.

6) Depreciation

So even though as we discussed earlier home prices historically rise over time, for tax purposes you get to “depreciate” a certain percentage of the value of the rental property each year. Depreciation, which is an expense for tax purposes, serves as a powerful income shield.

7) Inflation

Inflation normally has a very negative connotation for most people. As a real estate investor, you put the power of inflation on your side. As the cost of living increases, you concurrently increase rent. The loan payment is fixed and you are now paying back the loan with “cheaper” dollars. Inflation is a great ally for debt financed properties!

8) Yield (Passive Income)

One of the key problems facing retirees is where to achieve decent yield on their investments. Real estate offers incredible passive income once the note is paid off.

9) Positive Cash Flow in Interim

Until the note is paid off, a good rental still returns several hundred dollars a month in positive cash flow.

10) Hard asset / Less volatile

With real estate you have the security of a hard asset that you can drive by and inspect at any time of your choosing. Additionally, although property values can go up and down, real estate is typically less volatile than other asset classes.

11) Own Property Free and Clear at End of Note

If you have a positive cash flow rental, other than the initial down payment, the rents collected from tenants have paid for all of the costs associated with the property. Once the loan is paid off, you now have an incredible cash flow producing asset with no debt attached to it.

12) Easy to Refinance

As property values increase over time, rental properties are relatively easy to refinance. This allows you to pull out equity and move it into other great property opportunities as they come along. Your initial down payment on the first property could serve as the equity that springboards you into many others.

13) Timing

With rental properties you decide when you sell. This is critically important for any tax minimization strategy. Additionally, by controlling the timing of a sale, you may also be eligible to capitalize on tremendously positive tax deferment programs like a 1031 Exchange.

14) Financial Freedom

This is the ultimate goal and what makes all of the hard work worth it! With long-term ownership of rental properties, you are able to create enough passive income that all of your living expenses are covered. You have no financial need to work at a job and have the freedom to pursue work (or any activity) for fulfillment.

As you can see from the list above, the economic structural systems and tax laws truly do benefit real estate investors! Is there any wonder why all of the successful, high networth business owners I came in to contact with utilized real estate as a wealth building tool? Real estate truly is an amazing tool you can use to transform your life!

Continue Reading

All You Need To Know About Real Estate Contracts

This legal document is used for the exchange or purchase of property and land between the buyer and seller. It can cover a lease, purchase, rental, or sale and is typically in writing. It follows the normal legal requirements and contract laws. It is also known as a contract for deed or land contract. A real estate contract can be composed by one side, signed, and offered to the other side for their agreement and signature or can be drawn up by both sides and signed. If any counter offers are going to be made, they must be done before either side signs the contract. If the real estate contract is signed and there is a counter offer, it is usually accompanied by a markup of the contract and then initialed.

In order for the contract to remain effective, it often has many conditions that must be maintained or met. It also lists a date of possession. This is normally time when the contract becomes effective and the possession of the property is transferred to a signer. Depending on the buyer’s financial reliability, there may be a deposit required and conditions may be added to the real estate contract.

There are many requirements to a property contract and it has to include all of the following in order for it to be considered enforceable and legal.

• A legal street address and description of the property
• The selling price
• Payment that is agreed upon by both parties
• If applicable, the specifics of a mortgage, including the due date, amount, terms, and rate
• Amount of deposit
• Closing date for the finalization of the contract and possession takeover date

In addition, the real estate contract must outline many of the details that can break or make the deal. Usually these details are important to the buyer. These can include:

• What is included and not included from the real estate
• Contingency for an inspection and when it is to be done
• Warranty on the components of the property or on the land
• Testing of any septic tanks and wells
• How long the offer stands before a counter offer must be initiated or before the buyer accepts the contract
• Insurance coverage between the exchange of possessions
• What process will be used for arbitration if the contract is broken or thought to be broken?

A lawyer from one or both sides can do a review of the real estate contract before it is signed. All of the terms of the real estate contract must be within the laws of the governing county. Often, if the contract is broken it could result in a civil claims lawsuit.

Continue Reading